Do Anti-Dumping Measures Address Market Distortions?

Regarding trade remedy actions, it has been highlighted in discussions among G20 economies, as well as more broadly in the WTO, that some of these measures are taken to address what is perceived by some as a market distortion resulting from trade practices of entities in another trading partner. The WTO Antidumping and Subsidies Agreements permit WTO Members to impose antidumping (AD) or countervailing (CVD) duties to offset what is perceived to be injurious dumping or subsidization of products exported from one Member to another. The Reports are not in a position to establish if, where or when such perceived distortive practices have taken place. The Reports have never categorized the use of trade remedies as protectionist, WTO inconsistent or criticized governments for utilizing them. The main objective of monitoring these measures is to provide added transparency and to identify emerging trends in the application of trade policy measures.

Most people agree that countervailing duties are taken to address market distortions, in the form of government subsidies. But with regard to anti-dumping, the existence of market distortions is much less clear. It is sometimes implied that market distortions are the reason for dumping, but this question is not part of the domestic anti-dumping assessment.

One thing that might help here is a requirement that companies filing anti-dumping complaints identify the market-distorting practices they believe led to the dumping. This identification would at least give some credibility to the idea that market distortions are responsible.

And if we want to take things a step further, the investigating authority could evaluate whether distortive practices actually led to dumping. It would be a similar causation analysis to what we see with determining whether dumped or subsidized imports led to injury.

Obviously, it is not realistic to propose such an approach at the WTO right now. But perhaps two relatively free trade-oriented countries who are negotiating an FTA could consider it as between each other.

Comments

Regarding trade remedy actions, it has been highlighted in discussions among G20 economies, as well as more broadly in the WTO, that some of these measures are taken to address what is perceived by some as a market distortion resulting from trade practices of entities in another trading partner. The WTO Antidumping and Subsidies Agreements permit WTO Members to impose antidumping (AD) or countervailing (CVD) duties to offset what is perceived to be injurious dumping or subsidization of products exported from one Member to another. The Reports are not in a position to establish if, where or when such perceived distortive practices have taken place. The Reports have never categorized the use of trade remedies as protectionist, WTO inconsistent or criticized governments for utilizing them. The main objective of monitoring these measures is to provide added transparency and to identify emerging trends in the application of trade policy measures.

Most people agree that countervailing duties are taken to address market distortions, in the form of government subsidies. But with regard to anti-dumping, the existence of market distortions is much less clear. It is sometimes implied that market distortions are the reason for dumping, but this question is not part of the domestic anti-dumping assessment.

One thing that might help here is a requirement that companies filing anti-dumping complaints identify the market-distorting practices they believe led to the dumping. This identification would at least give some credibility to the idea that market distortions are responsible.

And if we want to take things a step further, the investigating authority could evaluate whether distortive practices actually led to dumping. It would be a similar causation analysis to what we see with determining whether dumped or subsidized imports led to injury.

Obviously, it is not realistic to propose such an approach at the WTO right now. But perhaps two relatively free trade-oriented countries who are negotiating an FTA could consider it as between each other.